China's consumer price inflation accelerated at its weakest pace in six months as food prices rose at a slower pace, although the long decline in upstream prices continued to moderate.
The consumer price index (CPI) rose 1.8 percent in July from a year earlier, compared with a 1.9 percent increase in June, the National Bureau of Statistics said on Tuesday, the slowest pace since January's 1.8 percent. Analysts polled by Reuters had expected a 1.8 percent gain.
Consumer inflation has remained well below China's official target of around 3 percent in 2016, despite concerns that severe summer flooding, which has disrupted public infrastructure and agricultural production, would increase inflationary pressures.
China's July trade data published on Monday showed domestic demand from industrial sectors was weaker than previously expected, while exports continued to fall as global demand slumped.
However, there are signs consumer goods sales are otherwise holding up. Kantar Worldpanel, a consumer sector research group, released a survey that showed fast moving consumer goods, such as perishables, grew 4.6 percent in China in the second quarter from a year earlier, faster than the 2.0 percent growth rate reported in first quarter.
Food prices were up 3.3 percent in July, compared with a 4.6 percent gain in the previous month. Prices of pork, China's staple meat, rose only 16.1 percent versus a 30.1 percent increase in June.
Non-food prices rose 1.4 percent, compared with June's 1.2 percent gain.
The producer price index (PPI) dropped 1.7 percent in July from a year earlier. Analysts had expected PPI to fall 2 percent.
Low inflation means Beijing has room to loosen monetary policy if needed, but policymakers appear to have disparate views over how much stimulus is needed to stoke economic growth, if any, and what form it should take.
However, strengthening producer prices mean there is likely less need to ease in the short-term. China's central bank has not adjusted interest rates since October 2015.
Producer prices for mining fell 5.6 percent in July on-year, while raw materials dropped 4.5 percent.
China's economy grew 6.7 percent in the second quarter from a year ago, beating analysts' expectations, as a public works spending spree and housing boom boosted construction activity and demand for raw materials.
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Source: Reuters
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